The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, has called for the development of a common taxonomy to meet the growth of stablecoins, that would also cover crypto-assets more broadly.
In a response to a consultation paper issued by the Financial Stability Board (FSB), WFE says this would create consistent and common regulatory classifications before they fragment further, rather than trying to fix differences after the fact.
The WFE asks the FSB, and other international standard-setting bodies, to generate, adopt and use a global taxonomy as it would drive a common understanding of whether a global stablecoin (GSC) or crypto-asset fits a certain classification or definition. “This would reduce the variance between jurisdictions and curb regulatory dissonance,” WFE says, adding a periodic review of the taxonomy would ensure that forms of GSC and crypto-assets, which have matured and may constitute a new, viable and commonly used product, can be incorporated and regulated accordingly.
The WFE asked the FSB to consider three areas for further work: the creation of classifications via a taxonomy for all GSC and crypto-assets; the application of the recommendations to all crypto-assets; and the application of the cross-border co-operation recommendations and information sharing requirements to the supervision of all those trading GSC/crypto-assets.
WFE further states that regulators should cooperate to share information on global stablecoins and crypto-assets and also on their issuers and the platforms on which they are traded. The submission states, “The WFE notes with concern that the FSB’s ‘survey indicates that jurisdictions were less likely to regulate the governance over the whole stablecoin arrangement, the operation of the infrastructure of a stablecoin arrangement and the validation of transactions’” and adds, “Without formalised co-ordinated approaches to enforcement and oversight in general, issues around market integrity and consumer protection will not be fully addressed.”
“We support the overall ambition of seeking to address fragmented regulatory approaches by moving to an outcomes focus, applying the ‘same business, same risk, same rules’ principle; and building on the need for cross-border co-operation in the supervision of global stablecoin, both for wholesale and retail,” says Nandini Sukumar, CEO of the WFE.